Microsoft's push into the cloud proves successful for the company, with demand for online versions of Office productivity software and the Azure web-services business to bolster sales and earnings.
Microsoft's revenue was $24.5 billion and increased 12% in the period that ended Sept. 30. Sales rose 12 percent to $24.5 billion amid buoyant demand for Azure cloud services. Net income in the recent period was 84 cents a share, Microsoft said Thursday.
"This quarter we exceeded $20 billion in commercial cloud ARR, outpacing the goal we set just over two years ago," said Satya Nadella, chief executive officer at Microsoft. "Our results reflect accelerating innovation and increased usage and engagement across our businesses as customers continue to choose Microsoft to help them transform."
"Our strong start to the fiscal year reflects the impact of our continued investment in product innovation and sales capacity to capture expanding market opportunities," said Amy Hood, executive vice president and chief financial officer at Microsoft.
Revenue in Productivity and Business Processes was $8.2 billion and increased 28% , with the following business highlights:
- Office commercial products and cloud services revenue increased 10% driven by Office 365 commercial revenue growth of 42%.
- Office consumer products and cloud services revenue increased 12% and Office 365 consumer subscribers increased to 28.0 million.
- Dynamics products and cloud services revenue increased 13% driven by Dynamics 365 revenue growth of 69% (up 69% in constant currency)
- LinkedIn contributed revenue of $1.1 billion during the quarter
Revenue in Intelligent Cloud was $6.9 billion and increased 14%, with the following business highlights:
- Server products and cloud services revenue increased 17% driven by Azure revenue growth of 90%
- Enterprise Services revenue increased 1% with growth in Premier Support Services offset by declines in custom support agreements
Revenue in More Personal Computing was $9.4 billion and relatively unchanged, with the following business highlights:
- Windows OEM revenue increased 4%, ahead of the overall PC market
- Windows commercial products and cloud services revenue increased 7% driven by annuity revenue growth
- Search advertising revenue excluding traffic acquisition costs increased 15% driven by higher revenue per search and search volume
- Surface revenue increased 12% driven by sales of the new Surface Laptop
- Gaming revenue increased 1% with Xbox software and services revenue growth of 21% offset by lower hardware revenue
Nadella has turned Microsoft into a cloud-computing powerhouse. Although Microsoft's Azure service still lags behind market leader Amazon by a wide margin, but Microsoft is attracting more big customers, even as Amazon Web Services also notches strong growth.